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Murphy Oil (MUR) Down 13.5% Since Last Earnings Report: Can It Rebound?

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It has been about a month since the last earnings report for Murphy Oil (MUR - Free Report) . Shares have lost about 13.5% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Murphy Oil due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Murphy Oil Reports Narrower-Than-Expected Loss for Q2

Murphy Oil incurred second-quarter 2020 adjusted loss of 71 cents per share, which is narrower than the Zacks Consensus Estimate of a loss of $1.05. However, the company delivered earnings of 21 cents in the year-ago quarter.

On a GAAP basis, net loss was $2.06 against an income of 54 cents per share in the prior-year quarter.

Revenues   

In the quarter under review, Murphy Oil’s revenues of $211.5 million missed the Zacks Consensus Estimate of $386 million by 45.2%. Also, the top line fell 71.6% from the prior-year quarter’s $744 million.

Operational Highlights

The company received $109 million of cash crude oil hedge settlements and recorded a $146-million non-cash mark-to-market loss on crude oil derivative contracts in the second quarter.

The company produced 168,000 barrels of oil equivalent per day (boe/d) in the second quarter comprising 58% of oil and 65% of liquids.

Moreover, it announced that the fabrication of King’s Quay Floating Production System remains on track and is expected to close in the third quarter of 2020.

In the quarter under review, Murphy Oil’s total costs and expenses amounted to $585.7 million, up 2.2% from $572.9 million in the prior-year quarter.

Operating loss from continuing operations came in at $374.1 million against operating income of $171 million in the prior-year quarter. 

The company incurred interest charges of $38.6 million, down 28.7% from $54.1 million in the prior-year quarter.

Financial Condition

Murphy Oil had cash and cash equivalents of $145.5 million as of Jun 30, 2020 compared with $306.8 million as of Dec 31, 2019. At the end of second quarter, total liquidity of the company was $1.6 billion.

Long-term debt, including capital lease obligation amounted to $2,956.4 million on Jun 30, 2020 compared with $2,803.4 million as of Dec 31, 2020.

Net cash provided by continuing operations activities at the end of the first six months of 2020 was $369.4 million compared with $655.4 million at the end of the first half of 2019.

It further reduced its planned capital expenditures to the $680-$720 million range or slashed more than 50% from the original 2020 guidance.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month. The consensus estimate has shifted 40.31% due to these changes.

VGM Scores

At this time, Murphy Oil has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Murphy Oil has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.


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